The analysis presented in the previous sections focuses on the contemporaneous effects of foreign debt
on both GDP and investment growth. To investigate the dynamic effects on the
subsequent levels of both GDP and investment growth, this section performs the local projection analysis (LP-OLS) developed by
[1]}.
The LP-OLS specification is described as follows:
\(\Delta _{h} GDP_{i,t+h}=\ln {GDP_{i,t+h}}-\ln {GDP_{i,t-1}}=\beta ^h{Foreign\_debt}_{i,t}+\Gamma ^hX_{i,t-1}\\[1.ex]+\delta ^h_i+\gamma ^h_t+\varepsilon ^h_{i,t+h}\) 
